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Business worries about politics and energy in election

Magna International’s chief executive Don Walker could not have framed the issue more starkly at the company’s annual meeting this month.

“I’m worried about electricity prices in Ontario, where all of our plants are located,” Walker said, as reported by the Toronto Star’s Dana Flavelle.

Walker’s not the only one worrying.

All of Ontario’s political parties have been forced to confront the issue of whether hydro rates are too high, whether they’re killing jobs — and what to do about them if that’s the case.

Ontario’s traditional backbone industries — automotive and other manufacturing, paper, mining and smelting, food — are all big power users. So are big landlords.

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Their lobby group, the Association of Major Power Consumers of Ontario (AMPCO), focused the issue earlier this year, with the election looming, by releasing a study of industrial power costs in competing states and provinces.

Ontario’s rates were the highest, according to the survey, at 7.6 cents to 9.4 cents a kilowatt hour. That compares with 4.5 cents a kwh in hydro-rich Quebec. In New York it’s 5.6 cents, in New England 5.4 cents, and Pennsylvania 4.5 cents (all prices in Canadian currency).

Critics of Ontario’s hydro rates often point to the decision in 2010 by mining giant Xstrata to shift processing concentrate from ores mined in Timmins, Ont., to Quebec, where power is cheaper.

The Liberals, under the gun on the issue because they’ve held power since 2003, acknowledge the concern over high hydro prices — by their deeds, if not their words. They’ve sought to ease rates for larger industries that bring new jobs and investment to the province by creating the Industrial Electricity Incentive Program.

Eligible businesses, which must meet investment and job targets, can buy power that would otherwise be exported as surplus for 5.5 cents a kilowatt hour.

In April, during the election run-up period, the Liberals expanded eligibility for the program to include more businesses.

They also expanded a program created in 2011 that allows big-volume power users to pay less for electricity if they reduce their consumption on the five peak usage days of the year.

The Progressive Conservatives point fingers at the Green Energy Act — which the Liberals said would provide not only clean energy, but would create 50,000 jobs. (They claim the total to date is 31,000.) The Conservatives highlight a report by the auditor-general in 2011 that said many of those jobs are temporary, and that the figure doesn’t include jobs lost because of higher hydro rates.

The Conservatives would scrap feed-in tariffs that are at the heart of Liberal green energy policy — 20-year contracts for renewable power producers, at fixed rates considerably higher than the market average. This, they say, would lower the average price of power, and stem the flow of jobs. It would also, they argue, reduce surplus power in Ontario.

That power is often exported at a loss. On some days, Ontario even pays neighbouring states and provinces to take it, or pays privately operated Bruce Power to reduce production.

The New Democrats support renewable energy, though not necessarily all Liberal policies.

While renewable energy draws much of the debate, nuclear power remains one of the most expensive and contentious items on the energy agenda. It does, after all, supply nearly 60 per cent of the province’s power.

The Liberals are committed to refurbishing the Darlington nuclear station — a job that has a $10 billion price tag, in 2013 dollars, excluding interest and contingencies.

The Conservatives would not only refurbish Darlington, but build two new reactors — price unknown — to replace the aging Pickering station, due to close by the end of the decade. They describe nuclear as the “key future source of Ontario’s basic energy supply.”

The New Democrats distance themselves from nuclear, pointing to past cost overruns on nuclear projects.

They say money spent on new nuclear plants would be far better invested in energy efficiency schemes, such as helping householders with energy retrofit projects.

They’ve concentrated their energy campaigning on consumer more than business issues, promising to give householders rebates of $100, and to eliminate the provincial portion of the HST on hydro bills.

An increasing concern for some big industries is the role of natural gas in the power mix.

Last winter’s cold weather strained natural gas supplies, they say. Because gas-fired plants occupy a key price-setting role in Ontario, that led to unexpected outcomes in both the gas and power markets. Consumers didn’t feel the effects directly, but it severely affected some firms that buy energy on wholesale markets.

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